Multifamily Investing in japan with a Partner
Hi Japan based investors:
I am a US citizen and permanent resident in Japan. I am a university professor with a good income.
I am looking to buy a multi-family here in Japan with a partner - He is a US citizen who is bringing some valuable connections and resources and I am providing access to financing.
What we are thinking of doing is starting a Gōdō gaisha and then I will get a loan for the property based on my salary and residency status and then transfer the property into our company.
Is this possible? I bought my personal residence here in Japan but I've never bought an investment property. Does anyone have a recommendation of how I could purchase a property with a partner like this?
Thanks,
Daniel
Hi Daniel,
Posting to hopefully bump this and get more attention. I am looking to do similar and am in the process of educating myself on Japanese Real Estate to do some multi-family investing (to house hack at first, and grow a portfolio beyond).
Have you spoken with a lawyer on the process of creating the GK and how to wrap investment property with a Non-PR? I would also take a look at tax implications in buying in your name with transferring into the company after the fact, etc and how that may affect the financing.
Are you mostly looking at buying in Shiga-ken?
Regards,
André
Hi @André Anderson ,
Thanks for keeping this going. You know I have been so busy closing a US deal on 19 duplexes with a couple of partners that I just put this on the back burner.
I haven't consulted with a lawyer yet, but I did talk to a couple of lawyer friends yesterday in Tokyo. Their understanding is that it would not be feasible for the same reason that you mentioned - transfer taxes. Transfer taxes in Japan are high and you would have to pay them twice, first to acquire the property in your name and second to move it to the GK.
Shiga is a great market. My personal residence has increased in price in the last few years and you probably know this doesn't occur often in Japan. However, I am mostly focused in Fukuoka. I do have some contacts in Tokyo as well that I might leverage to purchase in the surrounding areas.
Where are you planning to buy in Japan?
Hi @Daniel Mills,
My pleasure! Hopefully there will be more traction here...
That's understandable. Way to go on killing that deal! Are you purchasing a portfolio or are they all separate transactions? Wishing you a smooth closing process.
That is rough, but I'm not surprised that there would be such high tax implications. I'm wondering if there are ways around this through some tax magic or certain entity structuring.
That is awesome to hear! I lived in Kyoto for awhile and have been in the Kansai area for the bulk of when I was in Japan. I've heard that appreciation is rare for a property overall, so kudos to your hard work and research! What was your criteria for picking your primary residence? I would imagine it was near a transportation hub like a station.
Why do you choose to focus on Fukuoka, if you don't mind me asking?
For a first deal, I would prefer to be in Kansai area, maybe something in a town in between Kyoto/Osaka or in either city as I'm familiar with the area (more than others at least) and love it there. As I'm in the beginning of my research, I'm sure I will add more to my criteria or decide to pivot elsewhere.
Thanks for following up and sharing!
Gentlemen, pinging you guys to get the conversation going. I believe Fukuoka is desirable because of the recent growth since 2012.
I am working with NTI to purchase my first property in Japan. I am looking at the Fukuoka and Nagoya Markets. Do you have any input on those?
It didn't seem like any/much deals came up in Osaka. I plan to travel to Japan every 1-2 years and 80% looking to move there in 4-5 years or so. Trying to build a decent portfolio until then.
Seems like rental yields have fell a bit since a few years ago. Any comment on if its still prudent to buy?
Cheers!
I prefer Fukuoka over Nagoya (just a personal preference) but you may find better yields in Nagoya. There is a guy focusing on Osaka. He sends out his latest apartments every few days on a LinkedIn group. Look for Japanese Investment Properties on LinkedIn. Kevin is the owner. Nice guy. NTI is also good to work with. (http://nippontradings.com/ - for those interested)
If you do not read kanji, look for 散歩XX分 to be under 10 - this is the number of minutes walking to the station. In some areas, 15 min may be acceptable but most want this under a 10 min walk.
Good luck!
Hi guys,
Sorry I have been out of it. Thanks for the input. Are you guys getting any financing on these purchases? That's my big issue. I am making much better returns in the US and with the chance of appreciation. Here in Japan, I would love to get into RE if I can get financing, but so far, no luck. It just doesn't seem worth it without it. @David Gotsill had a good post about this recently.
@Daniel Mills - if you do not have PR, the only bank I’ve found that will loan to me (apart from Suruga) is Prestia. Prestia is pretty strict with their loan criteria and won’t finance a building - only single apartments. They also seem to be only in Kanto for the loan program. Their rates are dependent upon your salary. The buildings must be a bit older and apartment greater than 15 sq-m.
Happy to repost all the details I have from them if anyone is interested - or just PM me.
@Bruce Crawford , thanks. I would really like to see that. Actually, I do have PR, but I haven't found it particularly helpful in getting an investment loan. I have visited a number of large and regional banks, usually with my Japanese wife, and we have just been turned away and told: "Japanese banks don't do investment loans." I know that's not true, but it seems the key is to find an agent who then introduces you to the bank. Have you had any luck with that?
My salary is just shy of the ¥10 million yen a year that they like to see too, so I think that's a sticking point. If they count my real estate income from the US it's above, but I'm not sure if it has to be all Japan-based job income.